Yashwant Raman Choudhary, Nashik V. Income tax Officer,

ITA 2859/PUN/2016

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 6744 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 1 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-01-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 16-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJEEV GHEI
• Keywords: Principle of natural justice; Initiation of penalty proceedings; Reasonable cause
• Section: 271(1)(c)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, PUN E BEFORE SHRI ANIL CHATURVEDI, AM AND SHRI PARTHA SARATHI CHAUDHURY, JM / ITA NO. 2859/PUN/2016 / ASSESSMENT YEAR : 2006-07 YASHWANT RAMAN CHOUDHARY, FLAT NO.5B, YASHWANT ARCADE, KATHE GALLI, DWARKA, NASHIK-422 001 PAN : AGAPC3653K ....... / APPELLANT / V/S. THE INCOME TAX OFFICER, CENTRAL-1, NASHIK / RESPONDENT ASSESSEE BY : SHRI PRAMOD SHINGTE REVENUE BY : SHRI SANJEEV GHEI / DATE OF HEARING : 09.01.2019 / DATE OF PRONOUNCEMENT : 21.01.2019 / ORDER PER PARTHA SARATHI CHAUDHURY, JM : THIS APPEAL PREFERRED BY THE ASSESSEE EMANATES FROM TH E ORDER OF THE LD. CIT(APPEALS)-12, PUNE DATED 08.09.2016 FOR THE ASSESSMENT YEAR 2006-07 AS PER FOLLOWING GROUNDS OF APPEAL ON RECORD: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LOWER AUTHORITIES HAVE ERRED IN LEVYING THE PENALTY OF RS.19,033/- BY INVOKING THE PROVISIONS OF SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 WITHOUT CONSIDERING APPELLANTS CONTENTION IN THIS REGARD. THE APPELLANT CRAVES FOR TO LEAVE, ADD, ALTER, MODI FY, DELETE ABOVE GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HEARING, IN THE INTEREST OF NATURAL JUSTICE. 2 ITA NO. 2859/PUN/2016 A.Y.2006-07 2. THE MAIN GRIEVANCE IS THE LEVY OF PENALTY OF RS.19,033/- U /S.271(1)(C) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). 3. AT THE TIME OF HEARING, THE LD. AR OF THE ASSESSEE APPR AISED THE BENCH AT PARA 6 OF ASSESSMENT ORDER WHEREIN IT IS MENTIONED THAT SINCE THE INCOME OF RS.2,18,300/- IS DECLARED BY THE ASSESSEE AS RESULT OF SE ARCH ACTION, THE ASSESSEE HAS CONCEALED THE PARTICULARS OF SUCH INCOME WIT HIN THE MEANING OF EXPLANATION 5A TO SECTION 271(1)(C) OF THE ACT. WHEREAS, IN T HE PENALTY ORDER AT PARA 7, THE ASSESSING OFFICER WRITES I AM SATISFIED THAT THE ASSESSEE HAS WITHOUT ANY REASONABLE CAUSE, FURNISHED AN INACCURATE PAR TICULARS OF INCOME AND THEREBY CONCEALED HER INCOME ... THE LD. AR VEHEM ENTLY ARGUED THAT THE LIMB IN WHICH PENALTY U/S.271(1)(C) HAS TO BE IMPOSE D, IS NOT CLEAR AND THE ASSESSING OFFICER IS AMBIGUOUS THAT ON WHICH LIMB PENALTY HAS TO BE LEVIED ON THE ASSESSEE. HIGHLIGHTING THE LEGAL REQUIREMENT OF MAKING A SPECIFIC REFERENCE TO THE SPECIFIC LIMB OF CLAUSE (C) OF SECTION 271(1) OF THE ACT AND RELYING ON VARIOUS BINDING JUDGMENTS IN THE CASE CIT VS. SHRI SAMSON PERINCHERY (2017) 392 ITR 4 (BOM.) AS WELL AS THE JUDGMENT OF HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. MANJUNATHA COTTON AND GINNING FACTORY 359 ITR 565, LD. COUNSEL DEMONSTRATED THAT THE PENALTY LEVIED BY THE AO IS UNSUSTAINABLE IN LAW. THEREFORE, THE LD. AR PRAYED TH AT PENALTY SHOULD BE QUASHED. 4. ON THE OTHER HAND, THE LD. DR HAS PLACED RELIANCE ON THE ORDER OF THE AUTHORITIES BELOW. 5. WE HAVE PERUSED THE CASE RECORD AND HEARD THE RIVA L CONTENTIONS ON THIS SPECIFIC LEGAL ISSUE, I.E. RECORDING OF PROPER SATISFACTION BY THE AO. WE HAVE PERUSED THE ORDER OF THE AO AND ON THE ISSUE SATISFACT ION RECORDED BY THE AO 3 ITA NO. 2859/PUN/2016 A.Y.2006-07 FOR INITIATING OF THE PENALTY PROCEEDINGS U/S.271(1)(C) OF THE AC T IS RELEVANT FOR EXTRACTION, THEREFORE, THE SAME IS REPRODUCED AS UNDER : 06. .SINCE THE INCOME OF RS.2,18,300/- IS DECLARE D BY THE ASSESSEE AS RESULT OF SEARCH ACTION, THE ASSESSEE HAS CONCEALED THE PA RTICULARS OF SUCH INCOME WITHIN THE MEANING OF EXPLANATION 5A TO SECTION 271 (1)(C) OF THE I.T ACT. PENALTY PROCEEDINGS U/S.271(1)(C) IS SEPARATELY INITIATED. 6. WE HAVE ALSO PERUSED THE PENALTY ORDER DATED 23.05.20 14 AND FIND THAT THE SATISFACTION RECORDED BY THE AO FOR LEVYING THE PENA LTY U/S.271(1)(C) OF THE ACT IS RELEVANT FOR EXTRACTION. THE SAID SATISFACTION READS AS UNDER: 07. I AM SATISFIED THAT THE ASSESSEE HAS WITHOUT AN Y REASONABLE CAUSE FURNISHED AN INACCURATE PARTICULARS OF INCOME AND T HEREBY CONCEALED HER INCOME TO THE EXTENT OF RS.2,18,300/- ON A/C OF ADMITTANCE OF ADDITIONAL INCOME. FROM THE ABOVE, IT IS EVIDENT THAT AT THE TIME OF INITIATION OF PENALTY PROCEEDINGS IN THE ASSESSMENT, AO MENTIONED ONE LIMB OF CL AUSE (C) OF SECTION 271(1) OF THE ACT I.E. CONCEALED THE PARTICULARS OF INCOME. B UT AT THE TIME OF LEVYING PENALTY, THE ASSESSING OFFICER MENTIONED BOTH THE LIMB S OF CLAUSE (C) OF SECTION 271(1) I.E. FURNISHED INACCURATE PARTICULARS OF INCOME A ND THEREBY CONCEALED HER INCOME. THIS MANNER OF RECORDING OF SATISFA CTION SUGGESTS THE EXISTENCE OF AMBIGUITY WITH REFERENCE TO APPLICABILITY OF SPECIFIC LIMB. THEREFORE, WE ARE OF THE OPINION THAT CONSIDERING THE ABO VE REFERRED BINDING JUDGMENTS SUCH PENALTY ORDER IS UNSUSTAINABLE IN LAW LEGALL Y. AO IS UNDER OBLIGATION TO SPECIFY THE CORRECT LIMB AT THE TIME OF INITIATIO N AS WELL AS AT THE TIME OF LEVY OF PENALTY. IN VIEW OF THE ABOVE DELIBERATION ON THIS ISSUE, WE A RE OF THE OPINION THAT THE PENALTY ORDER IS LIABLE TO BE QUASHED ON THIS LEGAL ISSUE. THUS, THE ORDER OF CIT(A) IS SET-ASIDE AND WE DIRECT THE DELETION OF PENALTY. ACCORDINGLY, THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE ALLOWE D. 4 ITA NO. 2859/PUN/2016 A.Y.2006-07 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON 21 ST DAY OF JANUARY, 2019. SD/- SD/- ANIL CHATURVEDI PARTHA SARA THI CHAUDHURY ACCOUNTANT MEMBER JUDICIAL MEMBER / PUNE; / DATED : 21ST JANUARY, 2019. SB !'#$%&%# / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(APPEALS)-12, PUNE. 4. THE PR. CIT, CENTRAL, NAGPUR. 5. '#$ %%&' , ( &' , )*+ , / DR, ITAT, A BENCH, PUNE. 6. $,- ./ / GUARD FILE. // TRUE COPY // (0 / BY ORDER, %1 &+ / PRIVATE SECRETARY ( &' , / ITAT, PUNE. 5 ITA NO. 2859/PUN/2016 A.Y.2006-07 DATE 1 DRAFT DICTATED ON 07 .01.2019 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 08 .01 .201 9 SR.PS/PS 3 DRAFT PROPOSED AND PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/JM 5 APPROVED DRAFT COMES TO THE SR. PS/PS SR.PS/PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7 DATE OF UPLOADING OF ORDER SR.PS/PS 8 FILE SENT TO BENCH CLERK SR.PS/PS 9 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 10 DATE ON WHICH FILE GOES TO THE A.R 11 DATE OF DISPATCH OF ORDER